In the third term, during the "entrepreneurial 80s" there was a period of extraordinarily imprudent business activity. Aspects of this were the lending of billions of dollars of money to buy existing businesses and to promote rash business projects. The state owned "State Bank of Victoria" and the "Victorian Economic Development Corporation" or VEDC were both involved in this dubious activity.
The activities of the VEDC became a major political liability to the Labor Party and the State Bank of Victoria was only saved from collapse by being bought out by the Commonwealth Bank of Australia. The collapse of the Pyramid Building Society was also distastrous, especially for its home city, Geelong and this contributed to the government's woes despite its lack of association with the private firm.
John Cain and Robert Jolly (the Treasurer) were perceived to be responsible for much of the economic disaster and the leadership of the Labor Party and the Premiership was passed onto Joan Kirner.
After leaving Parliament, Cain lectured in politics at the University of Melbourne.
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